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Herencia Resources updates on busy period at Paguanta project

Published: 08:35 09 May 2011 EDT

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Herencia Resources (LON:HER)  has confirmed the presence of copper and silver at the Doris prospect as it unveiled the first assay results from a recent 10-hole drill programme.

This morning the company gave investors an update on the Paguanta project in Chile – which hosts Doris, as well as the La Rosa copper porphyry and Patricia zinc-silver-lead targets – after what it described as a period of significant activity.

It gave assays from the first three holes of the Doris drilling programme with the highlighted results including 0.6 metres grading 1.09 percent copper and 51 grams per tonne (g/t) silver and 0.5 metres grading 0.36 percent copper and 20 g/t silver.

Additionally there were two other assays with 1 metre and 0.5 metres grading 0.23 and 0.64 percent copper respectively. The remaining assays are scheduled over the next 4 weeks.

Elsewhere at La Rosa a five-hole, 943 metre drill programme has been completed. Herencia said that two of the holes may have intersected a pyritic shell, which may be associated with porphyry systems, after the initial review of the drill core. Assays are due in the first half of June.

At the Patricia prospect Herencia believes it has potentially discovered a new vein. It said that two holes, recently drilled on the prospect, appear to have intersected narrow base metal sulphide mineralisation.  

The company stressed that this is potentially a new target area for the Paguanta project and assays are due in the first half of June.

In the statement Herencia managing director Bohm emphasised that the new mineralised structure to the eastern end of the current Patricia resource may present an opportunity for additional process plant feed without the need for significant capital development work.  

Additionally more outcropping copper oxide has been identified in a new location on the Paguanta project, 200 meters to the south-west of the La Rosa target. Sampling results are expected in June.

Bohm said:"these last few weeks of site and corporate activity have proved fruitful for the company.  

“The confirmation of the presence of copper and silver in several drill holes at Doris requires follow up by our Geologists, to understand the implications for both the Doris and La Rosa prospects.The discovery of additional surface copper-oxide, just to the south-west of La Rosa, likewise needs to be reviewed following receipt of assays. 

“When combined with the preliminary geological observations obtained from reviewing the La Rosa drill core, we believe the prospectivity for the potential for a porphyry system in the area has increased.”

On site Herencia’s busy progress is set to continue as a second diamond drill rig has now arrived on site and a metallurgical sample drilling programme as started at Patricia.  Infill drilling is also expected to get underway on the prospect this month.

Feasibility work is also underway in a number of areas, including metallurgical test work and reviewing access road options.

Meanwhile Herencia also plans to start field work on its new copper-gold joint venture in Chile’s Atacama region in the June, drilling has been pencilled in for October 2011.

Bohm also stressed that Herencia assumed silver prices of US$26.78 an ounce when it calculated the Paguanta project’s net present value of US$90.4 million in November 2010 - silver is currently valued at around US$36 and it was recently priced as high as US$48 an ounce – and that Patricia is expected to produce 1 million ounces of silver as a by-product each year.

“Not only is this significant from a project cash-flow perspective, it may open up alternative financing options for future consideration,” Bohm said.

“We remain excited by both the Paguanta Project and our potential new copper-gold Project, as we believe they offer both short and medium term production potential and exposure to zinc, silver, lead, copper & gold commodities, in a favourable operating environment."

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